“We all know that at the beginning of society, products are consumed by the producers themselves, and that these producers are spontaneously organized in more or less communistic communities; that the exchange of the surplus of these products with strangers, which ushers in the conversion of products into commodities, is of a later date; that it takes place at first only between individual communities of different tribes, but later also prevails within the community, and contributes considerably to the latter's dissolution into bigger or smaller family groups.” (p 897)
There is a reason that this historical fact, and Marx’s comment about there being difficulty in transferring means of production, from one sphere to another, is important. As soon as it does become possible to transfer the means of production more easily and particularly when money-capital can be used to buy these means of production, and the appropriate type of labour-power, it becomes possible for this capital to simply move to where the rate of profit is highest. Production of these commodities is then significantly increased, their increased supply then depresses their market price, until it falls to a level whereby it is no longer higher than in some other sphere of production. Capital then moves to this next sphere, and the process evolves, until all areas of production have fallen under the control of capital, and prices have been set at the price of production.
Even after the primitive communes are dissolved, but before production dominated by capital, however, the majority of production is direct production to meet the needs of the producer and their family. These producers, therefore, are actively engaged in production and know, in detail, the value of different products. Either they produce them themselves or they see, at first hand, that production in the village.
“The little that such a family had to obtain by barter or buy from outside, even up to the beginning of the 19th century in Germany, consisted principally of the objects of handicraft production — that is, such things the nature of whose manufacture was by no means unknown to the peasant, and which he did not produce himself only because he lacked the raw material or because the purchased article was much better or very much cheaper. Hence, the peasant of the Middle Ages knew fairly accurately the labour-time required for the manufacture of the articles obtained by him in barter. The smith and the cartwright of the village worked under his eyes; likewise, the tailor and shoemaker — who in my youth still paid their visits to our Rhine peasants, one after another, turning home-made materials into shoes and clothing. The peasants, as well as the people from whom they bought, were themselves workers; the exchanged articles were each one's own products. What had they expended in making these products? Labour and labour alone: to replace tools, to produce raw material, and to process it, they spent nothing but their own labour-power; how then could they exchange these products of theirs for those of other labouring producers otherwise than in the ratio of labour expended on them? Not only was the labour-time spent on these products the only suitable measure for the quantitative determination of the values to be exchanged: no other way was at all possible.” (p 897-8)
I have given more extensive historical evidence that, from the earliest times, the value of products was determined by the labour-time expended, and this provided the objective basis for the later development of exchange value – (Historical Proofs and Origins of The Labour Theory of Value).
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